ECJ – Companies can leave Iran business if cost of approval is too high

(Reuters) – European companies could go out of business with Iran if they suffer extreme economic losses as a result of US sanctions.

The European Court of Justice (ECJ), the highest court of the European Union, gave this ruling on Tuesday. Its background is a lawsuit brought against Deutsche Telekom by the German branch of the Iranian state bank Meli. The telecom conglomerate concluded a contract with the bank in 2018 before the contract expired. Now the Hamburg Higher Regional Court has to decide whether retaining the contract with Bank Meli der Telekom, which with its US business generates about half of its sales, would cause such disproportionate losses. It was not clear when OLG’s decision would be taken.

Also in 2018, then US President Donald Trump unilaterally terminated the international nuclear deal with Iran and again imposed severe economic sanctions that were removed during the 2015 deal. Firms doing business with Iran were also threatened with punitive measures. Unlike the United States, the signatory states of Great Britain, France, Germany, China and Russia adhered to the agreement. A year after leaving the US, Iran gradually violated its terms, as announced.

The European Union, which supports the nuclear deal, sought to salvage the deal and pass legislation to prevent individuals and companies from complying with the new US sanctions. The ECJ supported this law in its ruling, arguing: “EU law on compliance with US secondary sanctions against Iran can be applied in civil proceedings.”

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